AfDB, UN Capital Development Fund showcase non-market tools to mobilize finance for adaptation
The African Development Bank and the UN Capital Development Fund (UNCDF) featured two innovative mechanisms for scaling up adaptation action and finance during a joint event held on 1 September 2022 on the sidelines of the Africa Climate Week in Libreville, Gabon.
The moderator, Gareth Phillips, African Development Bank Manager for Climate and Environment Finance, noted that the current adaptation finance levels are insufficient to meet the needs of developing countries. However, he said that the private sector and local governments can play a crucial role in filling this gap.
He said the African Development Bank and UNCDF could also help to: address the lack of credible adaptation metrics and indicators by developing and using methodological tools; creating incentives to attract a broad range of actors to engage in adaptation; and unlocking new financial streams.
Ludovica Amatucci, a program analyst at UNCDF, made a presentation on the Local Climate Adaptive Living Facility (LoCAL mechanism). The tool helps local governments and communities to tap into climate finance for locally-led adaptation, contributing to the implementation of the Nationally Defined Contributions under the Paris Agreement, as well of National Adaptation Plans and Sustainable Development Goal 13 (Take urgent action to combat climate change and its impacts).
Amatucci mentioned that the LoCAL mechanism supports inter-governmental fiscal transfer systems that target adaptation actions at the local level while reinforcing transparency and reporting through those systems.
Kidanua Gizaw, Senior Climate Finance Officer at the African Development Bank, said that the Bank is piloting an Adaptation Benefits Mechanism (ABM) as a non-market, results-based finance tool to boost investments that enhance the resilience of vulnerable communities and ecosystems.
Ines Josten, Project Manager of the Green Cooling Initiative at the German Agency for International Cooperation (GIZ), explained that higher temperatures arising from climate change mean that traditional potato storage techniques in Kenya are no longer adequate and potato crops cannot be preserved as long as before. Storing potatoes in a cool place keeps the crop from rotting.
The first approved ABM methodology “Potato storage using green cooling technology”, developed by Perspectives Climate Group and funded by GIZ, presents a means to measure and quantify the benefits of modern, clean energy-based storage solutions in terms of saved wealth due to decreased risk of rotting of potatoes. Applying this methodology to an ABM project would demonstrate better its added value and help to mobilize finance for clean technology to secure the livelihoods of smallholder farmers in Kenya and the region.
Omar Saleh, Managing Director of Zephyr Consulting, representing SLAMDAM, a Dutch private sector organization, presented the new ABM methodology, “Flood damage reduction using a mobile flood barrier,” based on an ABM demonstration project in Lagos, Nigeria. The ABM methodology enables the mobilization of funds by linking adaptation benefits to investments in the mobile flood barrier.
Kouassi Amani, a Project Lead of the ‘Cocoa Climate Resilience’ ABM demonstration project implemented by the International Agroforestry Centre (ICRAF) in Cote d’Ivoire, illustrated how the project could use the ABM to incentivize private sector investment in cocoa agroforestry for climate change adaptation in West Africa. ICRAF has tapped on the rich climate change knowledge within their organization to prepare a new ABM methodology for resilient and sustainable cocoa production, using a participatory approach involving a broad range of stakeholders, including the local smallholder cocoa farmers and women organizations.
Africa Climate Week forms part of a series of regional climate weeks being held globally. Participants came together to outline Africa’s objectives for the upcoming COP27 in Egypt and unify and amplify the African voice to ensure action.